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Explain loan repayment?

I'm a high school senior, and while I understand that obviously loans have to be repaid with interest, I was wondering if some of you could enlighten me about the logistics of this.

I am going to be premed, and while I know there is room to change my mind, I want to understand how going to med school would affect my life financially before becoming committed to premed and all of the activities that go along with it.

I will not have financial assistance from my parents for medical school. As far as undergrad goes, they are willing to pay 15k/year. I live in CA, so this leaves me with 18k and rising to go to a UC. My estimated COA after aid at ivies/similar schools is 29-30k, so about the same as a UC. If I go to a UC or a meets need school, after subtracting 5k/year in wages from working, I will graduate with about 50k in debt (parents are willing and able to cosign).

I have been accepted to Bama as a NMSF and will receive the NM money. I do not want to go to Bama, but would if it was absolutely necessary. Another option is community college. In addition to UCs and meets need schools, I am applying to a few schools that offer competitive scholarships for science students (Colorado College, WUSTL) but these are obviously a long shot.

So, if I graduate undergrad with about 50k in debt, then med school with 200-250k, how will repayment work? I understand that my undergrad loan payments will be deferred throughout med school. Will they collect interest during this time? Then after med school, I will be sitting on about 300k in debt. Do undergrad and med school payments defer during residency? Will my loans collect interest during this time?

Is going to med school and graduating with 200-250k in debt, even without undergrad debt, a really stupid thing to do? To be honest, I can't see myself doing any other job, but I know that I also want to be realistic and don't want to financially ruin myself by the time I am 30.

If this is helpful, basic stats: 35 ACT, NMSF, CA resident, Hispanic, top 1% of competitive public school, two summers of science research (one summer at a program with ~5% acceptance rate), range of commitment to ECs.

Replies to: Explain loan repayment?

Any unsubsidized loans you have during undergraduate will accrue interest starting from the day they are disbursed. Subsidized loans will begin to accrue interest 60 days after graduation. You will be able to defer your undergrad loans while you are in med school, but the interest on both unsub and sub will continue to accrue.

Congress has eliminated all subsidized loans for graduate and professional students. So any loans you take for med school will start charging interest immediately. Unsub loans are 6.8%; grad plus at 7.9%. (You can only borrow up to $20,500/year in Stafford loans.)

During residency, you can opt for income based repayment (IBR). IBR applies to federal loans only and is not available for private loans. During IBR, you will pay 15% of your discretionary income (after a modest living allowance adjusted for family size) for 25 years or until your loans are paid off.

If you work in a public service position for 10 years continuously AND you've made on-time, appropriate IBR payments the whole time, your loans are eligible for forgiveness at the end of the 10 years.

This can be tricky because doctors working at public hospitals are not always working directly for the hospital, rather they work for a medical group contracted with the hospital--and that makes those jobs ineligible as public service positions.

You can reduce some of med school expenses by looking at your state med schools. Those tend to be your least expensive option and you may be able to graduate med school with ~$135K in loans rather than the $200-250K more common at private schools.

Alternatively, you can enlist in the military and attend USUHS or any other medical school you're accepted to (with fully paid tuition plus a living allowance) and serve a 7 year service obligation as military doctor after graduation. (Both my PCP and my OB/GYN did this.)

There are also state and federal loan forgiveness programs if you agree to work in a federally designated medically underserved area for at least 4 years. For each year of service, up to $25K of loan debt is forgiven. However these programs are for primary care physicians only (family practice, Ob/Gyn, psychiatry, pediatrics and general internal medicine).

So there are options. Maybe not the ones you were hoping for, but there are.

~~~~~

But I have a question for you....how do you figure that your will have $50 K in undergrad loans? You cannot borrow that much. You can only borrow the federal direct loan limits: $5,500 for freshman, $6,500 for sophomore and $7,500 for juniors and seniors. Any amount above those limits will require a co-signer. Are your parents willing to co-sign a loan for you?

But I have a question for you....how do you figure that your will have $50 K in undergrad loans? You cannot borrow that much. You can only borrow the federal direct loan limits: $5,500 for freshman, $6,500 for sophomore and $7,500 for juniors and seniors. Any amount above those limits will require a co-signer. Are your parents willing to co-sign a loan for you?

My father is willing and able to cosign.

Congress has eliminated all subsidized loans for graduate and professional students. So any loans you take for med school will start charging interest immediately. Unsub loans are 6.8%; grad plus at 7.9%. (You can only borrow up to $20,500/year in Stafford loans.)

Ouch.

You can reduce some of med school expenses by looking at your state med schools. Those tend to be your least expensive option and you may be able to graduate med school with ~$135K in loans rather than the $200-250K more common at private schools.

A state medical school would undoubtedly be my first choice. However, I am a California resident and the UC med schools look to cost about 60k/year instate. Because I won't have an income or assistance from anywhere, I don't see $135k in debt being a realistic goal. http://www.ucdmc.ucdavis.edu/medschool/financialaid/pdfs/1213-coa-medicine.pdf For example, UCD looks like 60k/year, correct? And then, of course, the UC medical schools are really competitive and I can't count on being admitted to one.

I suppose another option is taking two gap years after undergrad in a different state like Texas, acquiring residency, and applying as a resident of that state to their medical schools. Is that an option?

During residency, you can opt for income based repayment (IBR). IBR applies to federal loans only (includes Direct loans and Grad Plus loans) but is not available for private loans. During IBR, you will pay 15% of your discretionary income (after a modest living allowance adjusted for family size) for 25 years or until your loans are paid off.

This probably isn't a horrible option. I'd honestly prefer to pay them off as fast as possible. If I am making ~200k post residency, assuming that about 40% would go to taxes, I could theoretically devote half of my after-tax income to loans and pay them off in 6-7 years, right? This would probably suck, though.

Alternatively, you can enlist in the military and attend USUHS or any other medical school you're accepted to (with fully paid tuition plus a living allowance) and serve a 7 year military obligation as military doctor after graduation. (Both my PCP and my OB/Gyn did this.)

Would I just apply to USUHS when I am applying to med school or are there additional things I would need to do to go this route?

There are also state and federal loan forgiveness programs if you agree to work in a federally designated medically underserved area for at least 4 years. For each year of service, up to $25K of loan debt is forgiven. However these programs are for primary care physicians only (family practice, Ob/Gyn, psychiatry, pediatrics and general internal medicine).

While I obviously don't know what my specialty would be, I really do not see myself in primary care at all. But this is definitely something to consider.

Thank you so much for all the advice! It sounds like this is doable, albeit difficult. But I am willing to make sacrifices.

RE: USUHS--you apply just as you would to any other school, but both on your application and during your interview you will be asked to rank your branch of service preferences. If you're accepted by the school and accepted by your preferred military branch, you will report for an induction physical and if you meet all standards, you'll be inducted and commissioned as an officer prior to the beginning of MS1.

RE: gap years. It's worth considering. Neither of my children went/are going straight to med school. One stayed in state and is now attending our very reasonably priced state med school located in a low COL area. The other lives OOS and may or may not change her residency before she applies in June.

The average age of a MS1 is now ~25 and increasing. D1 says only about 1/2 of her class came straight out of undergrad.

BTW, I think your estimation of how much you'll be able to devote to repaying your loans after residency is overly optimistic. COL, mortgage expenses, malpractice, taxes, professional expenses, business expenses/loans--all sort of things you haven't considered. And don't forget by your 30s, you may also be supporting a spouse and children.

Alternatively, you can enlist in the military and attend USUHS or any other medical school you're accepted to (with fully paid tuition plus a living allowance) and serve a 7 year service obligation as military doctor after graduation. (Both my PCP and my OB/GYN did this.)

My (med student) roommate chose this route. For each year the military pays your tuition, you owe them one year of service. You will most likely do your residency in a military hospital (you can apply for waivers to go other places, but apparently they're rarely granted). Your time as a resident doesn't count toward or against the years you owe. So, if you join before med school, and have them pay all 4 years of med school, then you would owe them 4 years of active duty after you complete your residency.

Looks like the 7 years you quoted post grad is residency + service--just wanted to clarify that active service years = years they paid for you, and residency is neutral.

If you're potentially interested in primary care, check this out: Home - NHSC

The best way is to avoid paying tuition for UG. Apply to UGs that are well known fro great Merit packages. There are publics as well as privates.
Did you consider that you might get deployed if you choose military option. My friend' S. almost did. Some people do not mind, it is part of their plan, but some others do not feel that it is for them.
"35 ACT, NMSF, CA resident, Hispanic, top 1% of competitive public school"
-There is absolutely no question in my mind that you can obtain full tuition or full ride for UG with thes stats. My D. had lower stats and she was on full tuition Merit for all 4 years in UG and it was not the only UG that offered her lots and lots. One private that you should definitely consider is Case Western. BTW, most students at Case Western Medical School are from California, not midwest, believe it or not. I do not know how it happened. I alsmost 100% positive that you would get Merit award at Case that would be very close to full tuition or full tuition or even a full ride.

Have you looked at the full list of NHRP scholarships on the Hispanic Students forum (under College Admissions, Specialty Topics)?

My estimated COA after aid at ivies/similar schools is 29-30k

Not all selective schools have the same FA policies, HYPS tend to be more generous, often much more so, than other highly selective schools. While no one can predict outcomes for those schools, you are a competitive candidate, what do the NPCs for these colleges say for your family?

Other schools with large merit packages in general or for URMs: Pitt, UMinn-TC, Fordham, OSU (Ohio), Dennison, UMiami, Davidson, Emory, Vandy, Rice, Duke/UNC-CH, UVA, UI-B, Penn State, UWisc-M, Villanova, CWR. Some of these need nominations and many have early deadlines.

Pitt looks for high numbers and it's important to apply early. UMinn-TC was extremely generous with D2, with merit aid COA would have been about 10k/yr.

BTW, I think your estimation of how much you'll be able to devote to repaying your loans after residency is overly optimistic. COL, mortgage expenses, malpractice, taxes, professional expenses, business expenses/loans--all sort of things you haven't considered. And don't forget by your 30s, you may also be supporting a spouse and children.

My (med student) roommate chose this route. For each year the military pays your tuition, you owe them one year of service. You will most likely do your residency in a military hospital (you can apply for waivers to go other places, but apparently they're rarely granted). Your time as a resident doesn't count toward or against the years you owe. So, if you join before med school, and have them pay all 4 years of med school, then you would owe them 4 years of active duty after you complete your residency.

While this isn't an awful option, I struggle with joining the military solely for cost purposes. I really have no desire to serve for the US Military, so this probably isn't a great option.

The best way is to avoid paying tuition for UG. Apply to UGs that are well known fro great Merit packages. There are publics as well as privates.
Did you consider that you might get deployed if you choose military option. My friend' S. almost did. Some people do not mind, it is part of their plan, but some others do not feel that it is for them.

Considering deployment is one reason I wouldn't want to join the military. As far as merit aid goes, I am on the lookout. Thanks for the suggestion of Case, I will look into it.

Not all selective schools have the same FA policies, HYPS tend to be more generous, often much more so, than other highly selective schools. While no one can predict outcomes for those schools, you are a competitive candidate, what do the NPCs for these colleges say for your family?

The NPCs range from about 28-33k at the Ivies, MIT, and Stanford, with HYPS on the lower end and the "lower ivies" on the higher end. My mother owns a business, and while it isn't terribly profitable, the assets devoted to it seem to affect the aid quite a bit. My brother will be in college my last two years, at which point my COA will go down individually, but so will my parents' contribution.

Other schools with large merit packages in general or for URMs: Pitt, UMinn-TC, Fordham, OSU (Ohio), Dennison, UMiami, Davidson, Emory, Vandy, Rice, Duke/UNC-CH, UVA, UI-B, Penn State, UWisc-M, Villanova, CWR. Some of these need nominations and many have early deadlines.

Thanks for this. I will look into all of these further. I have applied to Pitt and they are actually flying me out next weekend (they pay for airfare and hotel which is awesome!). If I get full tuition at Pitt, I will most likely go there. I have UVA and Duke on my list as well. I think I will add CWR and possibly Emory. I'll look into OSU.

Thanks everyone for the contributions! You guys have given me a lot to think about.

While this isn't an awful option, I struggle with joining the military solely for cost purposes. I really have no desire to serve for the US Military, so this probably isn't a great option.

COMPLETELY agree with you. Don't join the military just to get school paid for. Join the military because you want to join the military. (She happens to come from a long line of Navy officers, so she really knows what she's getting herself into!)

If I get full tuition at Pitt, I will most likely go there. I have UVA and Duke on my list as well. I think I will add CWR and possibly Emory. I'll look into OSU.

Bama is certainly not the only school that offers large scholarships for NM. I was sent several offers for full rides from schools where I didn't even apply(such as UT Dallas, St. Johns, USC). I believe there are many others (Arizona, Oklahoma?)

Some of the schools you listed as possible scholarship possibilities (Duke, WUStL) offer only a handful which makes the odds very long. My school literally offers hundreds of full rides(and loves California applicants), but you already missed the deadline

Bama is certainly not the only school that offers large scholarships for NM. I was sent several offers for full rides from schools where I didn't even apply(such as UT Dallas, St. Johns, USC). I believe there are many others (Arizona, Oklahoma?)

USC is also on my list. They offer about 140 full tuition scholarships. I have been getting mailings from UTD, St. Johns, etc.

Some of the schools you listed as possible scholarship possibilities (Duke, WUStL) offer only a handful which makes the odds very long. My school literally offers hundreds of full rides(and loves California applicants), but you already missed the deadline

You're definitely right here. I'm not expecting full tuition at Duke or WUSTL. I think my list needs some work, tbh. I'm pretty late in the game here, but I think I can make it work as I still have a couple months until RD apps are due.

Even if undergrad is debt-free, I am still worried about having over 200k in debt from medical school, but it doesn't look like there is another option besides the military, which I have pretty much ruled out.

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